What kinds of businesses are appropriate for sole proprietorship?

You can operate any business as a sole proprietor. One exception which I would like to mention is :

Businesses that require Professional licenses: Few professions like attorneys, CPAs etc require a license to operate a CPA & law firm. So, unless you have a license you cannot start these businesses. Same with insurance agents, mortgage brokers, financial advisors etc. So in short, check the prerequisites or licenses required for the business as part of your initial research.

Below are few pros and cons of operating as a sole proprietor

The main advantage of operating as a sole proprietor is it is easy to start your business, sometimes with very less capital especially consulting businesses.

There are few disadvantages of operating as a sole proprietor. If there is a lawsuit/any unpaid business debts, you may be held personally liable and your personal assets may be used to pay off those dues. So, many chose to open either LLC or a Corporation.

 

** Our response to a question posted on quora.

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Posted In: Company Formation

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